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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: BDR who wrote (46337)	9/8/2001 12:29:09 PM
From: kumar	Read Replies (2) \| Respond to of 54805

Dale, IMHO, the company that owns IOS. cheers, kumar

To: BDR who wrote (46337)	9/8/2001 4:36:47 PM
From: techreports	Read Replies (3) \| Respond to of 54805

Re: Cisco v. Juniper market shares One thesis advanced here has been that gorillas will gain advantage during a downturn. Don't these numbers suggest that Juniper is continuing to gain share? Who will come back stronger in the recovery? A new market share report by RHK, Inc. shows Cisco continuing to dominate the North American IP router market but beginning to lose market share to Juniper in the first half of 2001. Beginning to lose market share? Don't know when this report was written, but the market has known this for months. Juniper has been gaining share for months now, probably years. Actually, Cisco claims they took back some share in the last quarter (roughly 3-5% share) Plus, the core router market is not a gorilla game. At least i don't think it is. Anyone more knowledge in this area care to voice their opinion? Avici followed with a 7% market share, up from 1 percent in 2000. This market segment, which includes equipment that directs traffic to the optical core at OC-48 or OC-192 speeds, reached $535 million in 1H01. I've read some things that say Avici is going to totally change the game and Cisco and Juniper are screwed. Avici allows carriers to upgrade their network when traffic increases. Juniper and Cisco forces the carriers to rip out the current equipment and install new ones. Can anyone say Innovator's Dilemma? 4. It is my belief that Cisco and Juniper cannot copy Avici's core router. Scalable core routers that are MPLS compliant are very difficult to make because half of the router is in the ipriori software. That in itself is 50% of the router. For Cisco and Juniper to make an Avici-type router would completely undermine all the routers they currently are marketing to carriers. They would have to destroy the foundation that their companies are based on. Again, I stress for anyone who doesn't understand this to pick up The Innovator's Dilemma, which shows how he even the most dominant companies become trapped within their own business models and fall because of the inability to change. Your abilities define your liabilities. Cisco and Juniper are case in point. and.. Cisco core routers are fixed configured and take many weeks if not months to provision additional router elements without disrupting the network. This added disruption and forklifting costs carriers money. If you don't believe that, look at the amount of Cisco boxes being piled up outside carrier dumpsters. You can buy Cisco boxes for pennies on the dollar on the secondary market. Avici's routers are the only scalable solution able to meet tomorrow's unexpected bandwidth demands. Avici's routers are based on the fact that the future is unpredictable, that internet traffic might explode at any time. The underlying network must be able to handle it or risk losing customers. A router is not just a physical network element, but also must be accompanied by software that is able to handle multiple protocols on the fly and be able to handle provisioning of routes (bandwidth) without disrupting the rest of the network. I'm not sure i'd buy Juniper shares. No one can really say Juniper will have 35% market share in 2007. At least I haven't read any convincing arguments. What competitive advantage does Juniper have over Cisco? Yes, their product is better today, but what about tomorrow and the day after? Cisco isn't going away.. For one thing, if JNPR's stocks is expensive i definitely wouldn't touch it because this would just increase the risk. Buying a gorilla or a great company that Buffet likes at a high multiple isn't as dangerous IMO, because eventually the fundamentals will justify the multiple. Buying JNPR when it was 50 billion increase ones risk, because they might only have 10% share by 2007. I highly doubt 10% share would justify a 50 billion dollar market cap. During the bubble days, however, many felt Juniper would capture 50% share and justify that huge market capitalization. Maybe they will.. Heck, if I was an investor in 1995, would I have bought Dell shares? Dell's advantage was their build-to-order model. Great idea, but i would have thought that by 2001.. Compaq, IBM, Gateway, and HP would have had some success. I think Dell has like 40% of the market. What does this tell us? Well, maybe Innovator's Dilemma is very hard to get over. Compaq and HP couldn't copy Dell, because that would jeopardize their current sales channel. Seven years later Dell is still gaining share..i'm impressed. So even though EMC's CEO knows about Innovator's Dilemma and the possible threat from NAS, will EMC be able to dominate 5 years from now? Will Avici hit Juniper and Cisco where it hurts? It is so important to find companies with great business models. Investors buy stocks in hope that the shares will go up (as well as profits and revenues), but the very idea of capitalism is competition and cheaper products for the consumer (which means profits should fall). Supposdily Buffet once made this statement, which i think is interesting: "As soon as dumb money recognizes that it is dumb money, it stops being dumb money." So once the dumb money (the masses) know they must be in the market and know how great NOK and CSCO's stock is, they stop being great stocks. p.s. Can anyone tell me if scalable core routers (that are MPLS compliant) are a possible disruptive technology? p.s.s. It's interesting that Siebel thinks shareholders come third. Buffet strongly feels that management should be shareholder friendly. Why do you say this? IOS was written 12 years ago for enterprise networks not backbone networks? I would think IOS is a legacy problem for Cisco not a competitive advantage. The numbers don't lie!!! If Juniper is gaining market share, then something doesn't add up. Gotta agree with paul_philp.